The  Present  Insurance  Situation  from 


an  Insurance  Superintendent’s  : < ' 
Viewpoint  > i i 


AN  ADDRESS 

Delivered  before  the  Ninetieth  Meeting 
OF 

The  Insurance  Society  of  New  York 

BY  THE 

Hon.  WILLIAM  TEMPLE  EMMET 

Superintendent  of  Insurance,  State  of  New  York, 
on  Tuesday  evening,  October  twenty- 
eighth,  Nineteen  hundred  and 
thirteen,  at  the  Aldine  Club 


Digitized  by  the  Internet  Archive 
in  2017  with  funding  from 

University  of  Illinois  Urbana-Champaign  Alternates 


https://archive.org/details/presentinsuranceOOemme 


THE  PRESENT  INSURANCE  SITUATION 
FROM  AN  INSURANCE  SUPERIN- 
TENDENT’S VIEWPOINT 


I regard  it,  I can  assure  you,  as  a very  great  honor  indeed  to 
be  asked  to  attend  this  dinner  as  a guest  of  The  Insurance  Society. 
The  scope  and  jurisdiction  of  your  Society,  as  I understand  it,  is 
about  as  broad  as  that  of  the  State  Insurance  Department, — of 
which  I have  the  honor  for  the  moment,  to  be  the  official  head. 
You  take  in  all  the  different  kinds  of  insurance,  just  as  we  do. 
I think  we  have  the  better  or  the  worse  of  you,  though,  in  one 
respect:  we  have  the  vast  fraternal  field  on  our  hands,  in  addition 
to  all  the  rest.  And  let  me  assure  you  that  upon  those  rare  mo- 
ments when  no  voice  is  heard  at  Albany  putting  some  question,  or 
propounding  some  problem,  in  connection  with  either  life  insur- 
ance, fire  insurance,  or  casualty  insurance,  our  friends  the  frater- 
nalists  are  usually  on  hand  to  prevent  the  Insurance  Department 
from  sinking  into  a condition  of  innocuous  desuetude. 

To  what  subject  shall  I address  myself  in  the  short  time  that 
I should  occupy  here  this  evening?  There  are,  of  course,  plenty 
of  pending  questions  relating  to  one  or  another  of  the  three  large 
insurance  subdivisions  — the  life,  the  fire,  and  the  casualty  fields 
— any  one  of  which  I suppose  I might  talk  about.  It  has  oc- 
curred to  me,  though,  that  in  addressing  a Society  which  embraces 
all  these  fields,  it  might  be  better  on  the  whole  to  steer  clear  of 
all  specific  problems  — most  of  which  I have  talked  about  on 
other  occasions,  anyhow,  in  the  recent  past  — and  try  to  give 
you  instead  a general,  if  necessarily  rather  sketchy,  resume  of  the 
whole  insurance  situation  in  New  York  as  it  strikes  me  after 
nearly  two  years  of  service  as  State  Superintendent  of  Insurance. 

Let  us  take  life  insurance  first.  I won’t  remind  you  how, 
seven  or  eight  years  ago,  departments  of  insurance  supervision  and 
legislative  halls  — not  to  speak  of  newspapers,  lecture  platforms, 
campaign  hustings  and  all  the  other  agencies  by  which  publicity 
in  America  is  secured  — rang  with  denunciation  of  the  manner 
in  which  the  business  of  life  insurance  was  being  conducted  here, 
and  with  proposals  for  sweeping  reforms.  That  harsh  criticism 
is  for  the  most  part  stilled,  and  one  listens  in  vain  for  further 
public  outcry  in  favor  of  new  and  drastic  legislation.  So  to-night 
I have  very  little  news  for  you  about  life  insurance,  and  it  is  one 
of  the  cases  where  no  news  means  good  news.  I have  no  thunder- 
bolts to  launch  against  existing  abuses  in  the  life  insurance  field, 


6 


no  proposals  for  new  legislation  to  advance.  I couldn’t  for  the 
life  of  me  think  of  any  particularly  reprehensible  practice,  of  a 
general  character,  connected  with  the  business  of  life  insurance, 
at  which  my  thunder-bolts  could  with  any  fairness  be  directed, 
nor  do  I see  what  possible  legislation  I could  propose  at  the 
present  moment  which  would  materially  improve  the  business  in 
the  slightest  degree.  What  legislation  we  now  have  on  the  statute 
books  is  entirely  adequate,  so  far  as  I can  see,  to  accomplish,  in 
the  life  field,  all  the  good  that  legislation  is  capable  under  any 
circumstances  of  accomplishing.  The  fact  is  that  the  house  clean- 
ing some  years  since  settled  nearly  all  our  old  life  insurance  prob- 
lems completely  and  permanently.  There  were  personal  tragedies 
connected  with  that  epoch-making  event  which  cause  people  some- 
times to  wish  that  it  had  never  happened,  but  the  results  have 
justified  it,  after  all.  The  business  of  life  insurance  in  the  United 
States  as  conducted  to-day  by  all  the  large  and  responsible  com- 
panies stands  upon  a splendidly  secure  foundation.  Most  of  the 
technical  questions  relating  to  the  business  have  been  solved,  and 
solved  for  all  time.  It  is  a standardized  business.  It  has  ceased 
to  be  a speculative  business.  The  policy  contracts  issued  by  the 
great  companies  are  as  safe  as  if  the  credit  of  the  government 
were  behind  them.  Of  course,  little  points  arise  from  time  to 
time  which  require  the  attention  of  legislatures  and  insurance  de- 
partments, but  broadly  speaking  it  may  be  said  that  the  life  insur- 
ance business  is  now  in  a condition  where  the  chief  ability  re- 
quired by  those  who  are  conducting  it  is  the  ability  to  conserve 
and  protect  the  great  achievements  of  the  past,  not  the  ability  to 
strike  out  new  paths  to  be  followed  in  the  future.  The  business 
of  life  insurance  in  America  has  cast  off  its  swaddling  clothes, 
it  has  sown  its  wild  oats,  it  has  reached  man’s  estate.  The  great 
life  insurance  organisms  of  the  country  are  national  assets  of 
which  we  may  be  justly  proud.  The  good  that  they  have  accom- 
plished in  their  encouragement  of  thrift  and  in  the  genuine  pro- 
tection they  are  rapidly  extending  to  every  family  in  this  broad 
land  against  some  of  the  hardships  which  ensue  when  death  calls 
the  family  breadwinner  from  his  labors,  is  simply  incalculable. 
Long  live  the  institution  of  life  insurance  as  it  now  exists  in 
America!  Thoughtful  people  will  agree,  I think,  in  saying  of  it 
“Esto  perpetual” 

Next  we  come  to  fire  insurance.  So  far  as  the  responsible 
and  honorable  character  of  the  men  who  are  leaders  in  this  branch 
of  insurance  is  concerned,  there  is  nothing  that  can  be  said  about 
the  life  insurance  men  which  does  not  apply  with  equal  truth  to 
the  leaders  in  the  fire  insurance  field.  It  is  quite  as  honorable  a 


7 


calling  as  the  other,  and  even  a more  ancient  one.  But  speaking 
as  a supervising  official  who  by  virtue  of  his  office  necessarily  has 
to  keep  his  finger  more  or  less  constantly  on  the  public  pulse,  I 
cannot  truthfully  say  that  the  happy  conditions  — with  respect,  I 
mean,  to  the  probability  of  future  agitations  on  the  part  of  the 
public  — which  I have  depicted  in  relation  to  life  insurance,  exist 
in  anything  like  the  same  measure  in  the  fire  field.  It  is  in- 
evitable, I suppose,  that  this  should  be  so.  The  leaders  in  the 
fire  insurance  business  must  simply  make  up  their  minds  to 
encounter  cheerfully,  and  with  a good  heart,  the  annoyance  and 
inconvenience  which  invariably  accompany  the  more  or  less 
bungling  attempts  of  the  people  in  their  organized  capacity  to 
solve  highly  technical  questions  by  governmental  means.  I shall 
not  go  into  this  subject  at  length  to-night,  because  I have  very 
recently  expressed  myself  upon  it  quite  fully,  in  a speech  before 
the  National  Association  of  Local  Fire  Insurance  Agents,  at  Cin- 
cinnati. I may  say  though,  for  the  information  of  those  who 
have  not  seen  what  I recently  wrote  on  the  subject,  that  the  par- 
ticular matter  I am  now  referring  to  is  the  likelihood  of  further 
agitation  in  favor  of  some  sort  of  governmental  control  over  fire 
insurance  rates.  There  is  no  popular  curiosity  whatever  at  the 
present  time  over  life  insurance  rates,  for  the  obvious  reason  that 
these  are  based  upon  mortality  tables  so  exact  and  scientific  as  to 
foreclose  the  possibility  of  any  serious  discussion  over  the  question 
how  much  reliance  should  be  placed  upon  them.  Over  fire  insur- 
ance rates,  on  the  other  hand,  there  exists  the  liveliest  possible 
amount  of  popular  curiosity  and  controversy  ■ — for  the  equally 
obvious  reason  that  the  public  is  completely  in  the  dark  as  to  how 
these  rates  are  arrived  at.  That  is  a condition  in  which  nowadays 
the  public  absolutely  declines  to  be  left,  particularly  when  the 
situation  is  one  into  which  monopolistic  influences  to  a degree 
have  crept,  and  the  old  competitive  spirit  has  to  some  extent  died 
out.  It  is  true  that  many  men  who  are  well  qualified  to  express 
an  opinion  on  this  subject  say  that  this  condition  of  popular 
ignorance  can  never  be  materially  altered  so  far  as  fire  insurance 
rate-making  is  concerned,  because  they  say  that  this  is  something 
which  can  never  be  reduced  to  an  exact  science,  that  it  must 
always  depend  in  the  last  analysis  upon  the  judgment  of  experts, 
and  that,  therefore,  it  can  never  be  explained  to  the  satisfaction 
of  the  public.  I certainly  don’t  propose  to  argue  that  matter  here 
to-night.  I merely  mention  the  existence  of  the  problem  to  show 
why  it  is  that  the  ancient  and  honorable  business  of  fire  insurance 
to-day  occupies  a position,  in  the  forum  of  public  opinion,  quite 
distinct  from  that  which  the  business  of  life  insurance  occupies. 


8 


However,  it  is  only  in  regard  to  this  one  matter  of  rate-mak- 
ing that  I apprehend  much  future  agitation  in  connection  with  fire 
insurance.  If  only  some  way  could  have  been  found  in  the  past 
to  initiate  the  public,  no  matter  how  superficially,  into  the  secrets 
of  the  art  of  fire  insurance  rate-making  — if  only  some  way  could 
be  found  now  to  explain  the  situation  in  such  a manner  that  the 
public  would  have  a just  appreciation  of  its  inherent  difficulties  — 
the  fire  insurance  business  would  occupy  a position  where  it  was 
less  likely  to  be  interfered  with  by  governmental  action  than 
almost  any  other  business  I know  of.  So  far  as  I have  been  able 
to  observe,  the  public  are  not  in  the  least  concerned  at  present  with 
the  question  of  the  solvency  of  fire  companies  they  insure  in. 
They  are  not  in  the  least  excited  over  matters  of  detail  respect- 
ing the  management  of  these  companies.  The  great  companies 
doing  business  here  have  literally  gone  through  the  fire  so  often, 
and  have  emerged  from  it  so  safely  and  soundly,  that  people  look 
on  them  nowadays  as  veritable  Rocks  of  Gibraltar,  so  far  as  their 
ability  to  pay  losses  is  concerned.  And  they  are  justified  in  so 
regarding  them.  Insurance  supervision  in  its  relation  to  fire  in- 
surance companies  has  in  consequence,  until  very  recently,  been  a 
simple  and  primitive  sort  of  thing  compared  with  the  kind  of 
supervision  to  which  life  insurance  companies  have  been  subjected. 
I suppose  that  one  reason  for  this  is  that  before  ever  insurance 
supervision  became  the  recognized  function  of  government  which 
it  now  is,  the  business  of  fire  insurance  was  on  a pretty  solid  basis 
in  respect  to  the  observance  of  certain  fundamental  principles  of 
fair  dealing  with  the  public.  It  has  been  a long  time,  for  instance, 
since  fire  companies  followed  the  rule  — still  prevalent  in  some 
other  lines  of  insurance  — of  compelling  their  policyholders  in 
too  many  cases  to  prosecute  their  claims  in  the  courts  before  these 
claims  would  be  paid  by  the  companies.  It  has  been  the  invariable 
practice  of  all  reputable  fire  companies  for  many  years  past,  so 
far  as  I know,  to  pay  the  just  claims  of  their  policyholders 
promptly,  without  lawsuit  and  at  the  full  figure  at  which  the 
actual  loss  has  been  appraised.  Instances  of  deliberate  resort  to 
litigation  or  unfair  appraisements  of  loss,  in  order  to  compel 
policyholders  to  take  less  than  they  ought  to  receive,  have  of  late 
years  been  so  few  that  this  question  of  the  attitude  of  fire  insur- 
ance companies  toward  their  policyholders  in  the  matter  of  pay- 
ment of  claims  can  scarcely  be  said  to  exist  at  all,  from  an  insur- 
ance commissioner’s  standpoint.  I am  mentioning  all  this  simply 
to  illustrate  what  I mean  when  I say  that  but  for  the  one  ques- 
tion of  how  fire  insurance  rates  are  arrived  at,  and  as  to  whether 
these  are  just  or  not,  the  fire  insurance  companies  would  have 


9 


little  to  apprehend  in  the  way  of  governmental  interference  with 
their  business.  And  I hope  I may  be  permitted  here  to  repeat 
the  hope  I expressed  in  my  Cincinnati  remarks  the  other  day,  that 
the  leading  men  in  the  fire  insurance  business  will  recognize  the 
inevitability,  and  on  the  whole  the  propriety,  of  some  further 
effort  on  the  part  of  the  people  in  their  organized  capacity  to 
reach  a just  solution  of  the  problem  of  fire  insurance  rate-making 
and  that  instead  of  trying  to  delay  the  fullest  and  most  public 
discussion  of  the  entire  question,  they  will  seek  to  co-operate  with 
the  representatives  of  the  people  in  solving  this  question  to  the 
satisfaction  of  reasonable-minded  men.  (I  realize  perfectly  well, 
of  course,  that  neither  this  nor  any  other  similar  question  can 
ever  be  solved  to  the  satisfaction  of  the  unthinking  portion  of  the 
public,  which  usually  sees  no  further  than  its  own  nose  m matters 
of  this  kind,  and  which  cares  mighty  little,  I am  sorry  to  say, 
about  right  principles  of  conduct  on  the  part  of  the  State  in  its 
dealing  with  what  is  invidiously  called  Big  Business.  But  these 
people  are  in  the  minority  — we  must  never  forget  that ! Blather- 
skite government  is  not  to  be  feared  here,  as  a steady  thing.  And 
even  blatherskites  sometimes  have  their  mysterious  uses.  To 
think  otherwise  would  be  to  despair  of  our  country  indeed!) 

So  much,  at  all  events,  for  my  impression  as  to  what  the  im- 
mediate future  has  in  store,  in  the  way  of  insurance  legislation, 
for  those  engaged  in  the  business  of  life  insurance  and  the  busi- 
ness of  fire  insurance.  In  the  one  case,  there  is  nothing  more  to 
be  done  at  present,  so  far  as  I can  see,  but  to  hold  on  to  the  good 
which  has  already  been  accomplished,  with  as  few  changes  in  the 
law  as  possible.  In  the  other  case,  there  is  this  vexatious  question 
of  rate-making  to  be  disposed  of  in  some  manner  that  will  be 
entirely  just  to  the  public  and  fair  to  the  business  of  fire  insur- 
ance in  private  hands.  This  brings  us  to  the  third  and  last  great 
subdivision  of  the  insurance  field,  the  business  of  casualty  insur- 
ance— and  this,  I may  as  well  frankly  say,  is,  from  a depart- 
mental point  of  view,  a horse  of  a very  different  color  from  either 
of  the  other  two  that  we  have  been  talking  about. 

I needn’t  tell  you  that  I am  not  making  a statement  of  this 
sort  in  any  unfriendly  spirit.  The  larger  casualty  companies  are 
not  only  conducting  their  business  in  strict  accordance  with  exist- 
ing law,  but  are  also,  in  many  cases,  voluntarily  establishing 
greater  safeguards  for  their  policyholders  than  the  law  now  pre- 
scribes. The  problems  which  from  an  insurance  department 
standpoint  casualty  insurance  presents,  are  due  entirely  to  the 
fact  that  the  field  is  a comparatively  new  and  uncharted  one.  The 
business  is  very  far  from  having  become  an  exact  science  like  life 


10 


insurance.  No  such  combined  “experience”  stretching  back  over 
years  has  been  gathered  in  the  casualty  field  as  is  possessed  by 
the  practical  men  in  the  ancient  field  of  fire  insurance.  In  the 
collection  of  valuable  casualty  experience,  however,  progress  is 
constantly  being  made ; although  as  an  offset  against  this,  one  notes 
the  fact  that  the  passage  of  workmen’s  compensation  laws  in  many 
States  of  the  Union  is  creating  such  new  condition,  in  one  im- 
portant branch  of  casualty  insurance  at  least,  that  much  of  the 
earlier  experience,  gathered  under  conditions  which  have  ceased 
to  exist,  is  now  proving  of  very  little  value.  But,  from  the  stand- 
point of  the  future  dependability  of  what  we  now  call  employers’ 
liability  insurance,  it  should  be  said  that  the  general  adoption  of 
the  principle  of  workmen’s  compensation  will  probably  do  more 
to  standardize  the  business,  and  make  it  absolutely  safe,  than  any- 
thing that  has  yet  happened. 

In  my  last  annual  report  to  the  Legislature  I called  attention 
to  the  fact  that,  if  insurance  by  stock  casualty  companies  was  to 
be  availed  of  generally  in  the  compensation  plans  of  the  different 
States,  it  was  essential  that  the  companies  engaged  in  this  busi- 
ness should,  in  certain  particulars,  set  their  houses  in  order  with- 
out further  delay.  Quite  recently,  I have  been  trying  to  help  the 
companies  do  this  by  issuing  what  some  regard  as  a rather  dic- 
tatorial order,  to  the  effect  that  the  acquisition  expenses  of  lia- 
bility companies  doing  business  in  the  State  of  New  York  shall 
be  kept  down  to  20  per  cent,  of  the  premiums  collected.  The 
necessity  for  some  such  rigid  rule  as  this  was  indelibly  impressed 
upon  my  mind  by  the  experience  we  had  last  winter  in  Albany 
in  trying  to  secure  the  passage  of  a sensible,  satisfactory  Work- 
men’s Compensation  Law.  The  bitter  criticisms  of  the  liability 
companies  made  by  the  opponents  of  our  measure  largely  centered 
about  this  question  of  the  exorbitant  sums  the  companies  were 
paying  for  the  getting  of  new  business.  While  the  demand  for 
out-and-out  State  insurance  which  was  predicted  upon  this  con- 
dition of  affairs  seemed  to  me  to  be  both  unnecessary  and  foolish, 
there  was,  notwithstanding,  a certain  amount  of  truth  in  the 
charges  that  were  made  against  the  companies,  of  wastefulness  in 
this  particular,  and  it  is  my  belief  that  unless  a pretty  radical 
change  for  the  better  occurs,  the  demand  for  State  Insurance  in 
connection  with  any  Workmen’s  Compensation  Law  that  is  passed 
will  become  so  strong  that  stock  company  insurance  in  this  branch 
of  the  business  will  be  swept  out  of  existence  as  the  result  of  it. 
And  this  I think  would  be  a calamity,  looking  at  the  matter  en- 
tirely from  the  standpoint  of  the  public  good. 

Let  me  admit  at  once  that  there  is  no  specific  law  on  the 


11 


statute  books  requiring  companies  to  keep  their  acquisition  ex- 
penses down  to  20  per  cent,  of  their  premiums.  Let  me  admit, 
also,  that  this  matter  of  acquisition  expenses  is  not  the  only  matter 
connected  with  their  business  that  casualty  insurance  men  should 
give  consideration  to.  I sympathize  to  a very  considerable  extent 
with  the  outraged  feelings  of  some  of  the  agents  and  brokers  over 
this  compulsory  reduction  of  the  acquisition  expenses  of  com- 
panies, but  a start  has  to  be  made  somewhere,  and  these  gentlemen 
can  rest  assured  that  before  the  house  cleaning  in  this  branch  of 
the  insurance  business  has  been  completed  the  companies  will 
probably  effect  economies  in  other  directions  as  well  as  in  this  one. 
I think  it  highly  likely  that,  as  matters  now  stand,  unless  the  com- 
panies voluntarily  reduce  the  total  cost  of  the  transaction  of  their 
business, — not  merely  the  cost  of  acquisition, — legislation  will  be 
proposed  which  will  compel  this  to  be  done.  I think,  too,  that  if 
liability  insurance  is  to  continue  to  remain  in  private  hands  there 
must  be  an  abandonment  by  all  reputable  companies  of  the  nig- 
gardly and  controversial  attitude  which  some  companies  have 
adopted  in  their  negotiations  with  the  injured  employees  of  those 
whom  they  insure.  The  practice  which  exists  in  the  fire  insur- 
ance world  in  this  particular  is  a pretty  good  model  to  follow. 
And  there  are  other  things  which  will  have  to  be  done  — such 
things,  for  instance,  as  the  maintenance  of  stronger  reserves  than 
the  law  now  requires.  Reforms  along  these  lines  are  absolutely 
essential,  I think,  for  the  preservation  of  the  business  of  casualty 
insurance  and  the  protection  of  policyholders.  They  are  suggested 
in  no  carping  spirit,  but  with  an  honest  and  sincere  desire  to  pro- 
mote the  welfare  of  the  business  to  the  fullest  possible  extent. 
And  I am  proud  to  say  that  the  views  which  I have  expressed 
along  these  lines  have  met  with  practically  unanimous  approval 
from  the  men  in  the  business  who  are  best  qualified  to  know  its 
present  needs. 

Now  let  me  say  a word  regarding  the  spirit  in  which  I think 
that  matters  of  this  kind  ought  to  be  approached  by  those,  like 
myself,  who  are  charged  with  responsibilities  in  the  field  of  insur- 
ance supervision.  As  I have  frequently  said,  I am  no  advocate 
of  strict  insurance  supervision  as  such.  There  should  be  just  as 
little  of  it  as  we  can  possibly  get  along  with.  Insurance  super- 
vision, as  I look  at  it,  is  not  primarily  intended  for  the  strong, 
well-established  companies  at  all.  Its  primary  purpose  is  to  shut 
out  the  frauds  and  cheats  and  fly-by-nights  from  trying  to  sell 
worthless  insurance  to  credulous  people.  But,  of  course,  it  is  im- 
practicable to  draw  any  line  of  distinction  between  companies 
which  might  safely  be  allowed  to  paddle  their  own  canoes,  and 


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companies  which  have  to  be  watched  closely.  Any  rules  that  are 
laid  down  must  apply  to  all  alike.  For  that  reason,  the  strong 
companies  should  willingly  undergo  what  sometimes  may  seem  to 
them  to  be  unnecessary  exactions  on  the  part  of  government.  I 
am  inclined  to  think  that  even  the  best  managed  companies  find 
that  the  co-operation  they  get  from  the  stronger  State  insurance 
departments  in  their  efforts  to  solve  the  outstanding  insurance 
problems  which  still  await  a settlement,  is  of  material  assistance 
to  them. 

Insurance  departments  should,  of  course,  be  controlled,  in 
their  relations  with  the  companies,  by  the  laws  of  the  land  and  not 
by  the  whims  of  ambitious  supervisory  officials.  When  a man  be- 
comes an  insurance  superintendent,  he  may  as  well  understand  at 
the  beginning  that  no  additional  inches  have  been  added  to  his 
stature  by  virtue  of  that  fact;  and  if  he  has  much  regard  for  his 
oath  of  office,  or  for  his  standing  as  a sensible  man,  he  will  be 
very  much  on  his  guard  at  all  times  against  the  dangerous  prac- 
tice of  pushing  his  brief  official  authority  to  its  uttermost  limit  in 
an  effort  to  impose  upon  a great  business  about  which  his  actual 
knowledge  based  upon  experience  is  probably  of  the  slightest, 
views  or  ideas  which  the  law  does  not  sanction,  and  which  upon 
analysis  may  prove  after  all  to  be  half-baked.  On  the  other  hand, 
no  insurance  superintendent  who  is  worth  his  salt  will  be  afraid, 
where  the  fundamental  question  of  solvency  in  involved,  and 
where  there  is  practically  a unanimous  sentiment  among  thought- 
ful men  in  the  business  in  favor  of  quick  remedial  action  — I say 
no  insurance  superintendent  who  is  worth  his  salt  will  be  afraid, 
under  these  circumstances,  to  rely  upon  the  general  authority 
which  can  be  found  in  the  Insurance  Laws  of  most  States,  to 
bring  about  in  a somewhat  summary  fashion  the  changes  he 
deems  necessary.  He  will  accomplish  this  by  an  exercise  of  some 
of  the  far-reaching  discretionary  powers  with  which  nearly  every 
insurance  commissioner  is  vested.  The  test,  in  my  judgment,  is 
simply  as  to  whether  or  not,  in  any  given  instance,  circumstances 
have  arisen  which  really  require  immediate  action  in  advance 
of  the  passage  of  specific  remedial  legislation.  It  has  seemed  to 
me  that  this  is  the  real  situation  in  the  liability  field  to-day;  and 
this  is  the  reason,  and  the  only  reason,  why  I issued  our  recent 
departmental  instructions  on  the  subject  of  the  acquisition  ex- 
penses of  liability  companies.  I am  perfectly  willing  that  anyone 
who  desires  to  do  so  shall  test  my  authority  to  issue  these  in- 
structions, in  the  courts.  If  the  courts  say  that  I have  no  right 
to  issue  them,  I will  withdraw  them.  But  nobody  has  yet  taken 
the  matter  into  the  courts,  and,  if  these  instructions  are  going  to 


13 


be  allowed  to  stand  as  issued,  and  if  they  are  cheerfully  accepted 
by  all  concerned,  I am  confident  that  a large  measure  of  good  will 
result,  and  that  the  need  for  future  drastic  legislation  will  to  a 
large  extent  have  been  averted. 

My  hope,  in  other  words,  has  been  to  clear  up  the  situation  in 
the  casualty  world  by  prompt  departmental  action,  rather  than  to 
let  matters  drift  until  this  great  branch  of  insurance  is  shaken  to 
its  foundations  by  another  Hughes  investigation  and  by  all  the 
sad  results  which  follow  more  or  less  inevitably  in  the  train  of 
such  an  event.  There  is  nothing  in  all  this  which  should  occasion 
the  least  alarm  to  anyone.  Casualty  insurance,  and  more  particu- 
larly employers’  liability  insurance,  is  simply  passing  through  the 
same  formative,  creative,  pioneer  period  that  life  insurance  and 
fire  insurance  had  to  pass  through.  With  all  the  new  forms  of 
insurance  protection  that  are  being  devised  daily,  covering  new 
hazards  against  which  the  public  wishes  to  be  protected,  it  would 
have  been  too  much  for  the  companies  transacting  this  business 
to  have  expected  that  they  would  find  any  broad  highway  stretch- 
ing out  in  front  of  them  which  they  could  travel  free  from  diffi- 
culties. Pioneers  can’t  expect  immunity  from  the  uncertainties 
which  fall  to  the  lot  of  all  explorers  of  new  territory.  The  main 
thing  is  that  the  men  in  control  — the  leaders  of  the  advance 
guard  who  are  clearing  the  way  for  future  generations  to  follow — 
shall  be  men  of  courage  and  character  and  wisdom.  It  can  truth- 
fully be  said  of  the  casualty  leaders  to-day  that  they  are  men  of 
that  kind.  They  are  performing  a most  difficult  piece  of  work 
and  it  is  a privilege  to  be  associated  with  them  in  it,  even  briefly. 

That  in  fact  is  how  I feel  about  all  the  innumerable  opportu- 
nities for  useful  public  activity  which  have  opened  to  me  during 
my  term  of  service  as  insurance  superintendent  of  New  York. 
The  experience  has  been  one  of  absorbing  interest  — an  experi- 
ence which  I shall  always  value  very  highly,  and  which  I shall 
never  by  any  possible  chance  forget. 


